Insights

Tribunal fees ruled illegal by Supreme Court

The full impact of this morning’s decision by the Supreme Court (SC) that the employment tribunal fee scheme introduced by the Government in 2013 was unlawful, and therefore void from the day it was introduced, may take some time to play out. The key point is that the SC found that the level of fees hindered access to justice: the immediate impact is that no more fees can be asked for under the current regime and almost £32 million will have to be repaid.

How did we reach this point?

The challenge made by Unison, that the fee regime was unlawful as it effectively prevented access to justice, had not succeeded in any of the lower courts in the last 4 years. This was, in part, due to the lack of statistical evidence available at the time the initial challenge was made. Now, the evidence before the SC, overwhelmingly demonstrated a reduction of claims before the Employment Tribunals of almost 70% since their introduction. Such a dramatic reduction could not be explained merely by saying that unmeritorious claimants had been deterred – the statistics plainly showed that ordinary would-be claimants were being denied access to justice. It was also in part due to the SC’s approach towards endorsing the importance of the courts and the resulting judicial decisions for society as a whole (not just those bringing the claim).

The SC considered the recent Government review on fees that had concluded that the level of fees was not preventing individuals bringing claims but merely that individuals chose to spend their income elsewhere. The SC found this an unconvincing answer: “The question whether fees effectively prevent access to justice must be decided according to the likely impact on the behaviour in the real world. Fees must therefore be affordable not in a theoretical sense, but in the sense that they can reasonably be afforded”.

It should not be a question of having to choose between reasonable living expenses or pursuing legal rights.

As mentioned above, the SC also emphasised the public importance of claims being brought, establishing principles of law that benefit not only those brining the claim but society as a whole both today and in the future: “every day in the courts and tribunals of this country, the names of people who brought cases in the past live on as shorthand for the legal rules and principles which their cases established.” So it is wrong in principle to say that the users of the courts alone should entirely fund those courts, as society as a whole benefits from the implementation of the rule of law.

Practical points

Some of the practical issues raised are:

The online system for applications will need to be quickly altered to allow claims to be made without any fees being required.

A mechanism for reclaiming fees paid over the last four years will need to be established. It is estimated that the Government will need to repay a huge £32million to claimants.

Many employers who have paid issue and/or hearing fees as part of settlements to claimants may feel aggrieved, but they will have no way to recover this cost. As a result some claimants may effectively get a double recovery windfall.

It is likely that there will be a dramatic increase in claims being brought but not only due to new claims being presented. Any individual who, since the introduction of fees, can demonstrate they were put off making a claim because of fees may be able to present a claim now and seek an extension of the relevant time limits.

A new fee regime can still be introduced but the level of fee will require a great deal of careful consideration by the Government.

In conclusion

This morning’s news marks the start of what will probably prove to be a very unsettled time for employers who perhaps have become inured to a less volatile environment with regard to employment litigation. That said, few would quarrel with the morality of the access to justice argument and will see this as a restoration of greater balance in the system. It is worth remembering that the Tribunal Rules, as since amended, have safeguards built in to deter and strike out unmeritorious claims (e.g. greater use of deposit orders, a rise in the recovery of costs and more effective use of case management powers). This was, of course, the main driver for the introduction of fees in the first place.

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